Vodafone’s (LON:VOD) share price fell by-7.80% as traders focused on a weakening German market which experienced negative revenue growth.
Vodafone was once among the world’s largest mobile telecoms companies and while it’s still a multi billion euro business, the glory days are long behind it.
Today’s Q3 update, which forms part of the financial year 2025 for the group, provided investors and the market with a glimpse of how the business is performing.
The transformation of the business continues apace, most recently Vodafone sold its Italian operations for €8.0 billion, and it has received regulatory approval to merge with rival network Three, in the UK.
Total revenues group wide increased by +5.0% in Q3 to €9.80 billion, services revenues grew slightly faster at +5.60%, reaching €7.9 billion.
Though notably service revenues in Germany shrunk by -2.60%. The company attributed this, and a decline in overall German revenues of -6.40%, to regulatory changes and lower broadband service revenues.
I am inclined to wonder if the ongoing political and economic uncertainty in the country has played a part.
Vodafone’s African operations are the bright spot in this report, organic service revenues here grew by +11.60% almost +2.0 percentage points more than in Q2, with South Africa and Egypt the among the main contributors.
Vodafone continues to buy back its own stock and has spent some €1.50 billion on this up until this morning’s release.
Looking ahead, management was happy to reiterate its guidance for FY 2025. It expects to deliver Group Adjusted EBITDAaL of around €11.0 billion and a group adjusted free cash flow of at least €2.40 billion.
The takeover of Three is expected to complete over the next couple of months.
However the market has chosen to focus on the downturn in Germany and the stock has traded down by -7.80% and has come within 2 pence of its 52 week low of 62.71p as a result.
In recent years Vodafone seems to have moved from one crisis to another, whilst selling off the crown jewels along the way.
Investors will be watching closely to see how well, and how quickly, it can integrate with Three, and achieve the cost synergies and savings that were largely behind the merger.
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